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US regulators ask three European banks to resubmit bankruptcy plans

The Federal Reserve and the Federal Deposit Insurance Corporation have asked HSBC, Royal Bank of Scotland and BNP Paribas to resubmit the bankruptcy plans for their US divisions by the end of the year, citing dissatisfaction with the original “living wills”.

The US watchdogs found the resolution plans detailed by the three foreign banks as lacking in “adequate” analysis of interconnections within their own operations.

The original living wills outlined by the arms of the three European lenders are also based on unrealistic assumptions regarding the likely behaviour of clients, counterparties, shareholders, and other stakeholders, the Fed and FDIC said.